TOKYO, Jan 31 (Reuters) - Asian shares fell slightly on
Thursday after rallies to multi-month highs, and longer for some
Southeast Asian markets, while the U.S. Federal Reserve's pledge
to retain its stimulus policy undermined the dollar.

Sentiment in Asian markets remained underpinned, however, by
positive factory output data in Japan, and strong gross domestic
product reports from Taiwan and the Philippines.

A weak dollar and signs of stabilisation in the euro zone
underpinned gold, and expectations that demand will pick up for
industrial commodities supported oil and copper prices.

European markets are likely to extend losses, with financial
spreadbetters predicting London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX would open down as
much as 0.3 percent. A 0.1 percent drop in U.S. stock futures
suggested a soft open at Wall Street.

After recent gains that took several markets to multimonth
highs, investors appeared to adopt a cautious stance ahead of
key data such as China's official manufacturing PMI and U.S.
monthly nonfarm payrolls on Friday.

Data on Wednesday showing the U.S. economy unexpectedly
contracted in the fourth quarter also crimped demand, but
traders were quick to note that the underlying fundamentals of
the U.S. GDP report were not as bad as the headline number.

"After many years of fears that the (U.S.) economy is going
to crash, it seemed like the worst is behind us. So better news
out of China and expectations for recovery in the United States
caused risk money to come back into equities, commodities and
energy," said Tony Nunan, an oil risk manager at Mitsubishi.

Upbeat economic reports from Asia failed to galvanize buying
in regional equities, which have sped to multimonth highs, but
the data reinforced optimism about the global economic outlook.

Taiwan raised its economic growth forecast for 2013, after
the fourth quarter expanded faster than expected and posted its
best growth in five quarters on improved demand for the island's
electronics exports and stronger consumption.

The Philippines said on Thursday its economy grew 1.5
percent in the December quarter from the previous three months,
better than market forecasts.

The MSCI's broadest index of Asia-Pacific shares outside
Japan eased 0.4 percent after rising 1.3 percent
over the past two sessions to nearly an 18-month high. The index
was set for a monthly gain of about 2.5 percent.

Australian shares eased 0.4 percent, pausing after a
10-day winning streak, the longest in more than nine years,
which hoisted local shares to 21-month highs.

Southeast Asian stock markets were generally softer but
remained near their highs. The Philippines hit a record
high for the third day running on Wednesday and Thailand's
market surged to a more than 18-year high on Wednesday.

DOLLAR LANGUISHES

The Federal Reserve on Wednesday kept in place its monthly
$85 billion bond-buying stimulus plan, arguing the support was
needed to lower unemployment.

The Fed's pledge to support the economy with easy money
policies underpinned sentiment, but put the dollar on the
defensive.

The dollar languished, easing 0.2 percent to 90.93 yen
, off Wednesday's 91.41 yen which was its highest since
June 2010. The euro steadied near 123.53 yen, after hitting
123.87 on Wednesday, its peak since May 2010.

A firmer yen weighed on Japan's benchmark Nikkei stock
average, but the market managed to wipe out earlier
losses to close up 0.2 percent at a fresh 33-month high.

Japan's December factory output rose at the fastest pace in
a year and a half and firms expect further gains, raising hopes
that stabilising global demand and exports will help pull the
economy from its slump.

The euro held near a 14-month high of $1.3588 scaled
on Wednesday.

"Euro/dollar we now think will rise to $1.37. The euro
crosses are also likely to benefit from the return of exiled
capital that left the euro zone," said Gareth Berry, G10 FX
strategist for UBS in Singapore.

"Europe is not out of the crisis yet, there is still lots of
uncertainty out there, but there has been enough stabilisation
to encourage some investors to return," he added.

Reports from the euro zone on Wednesday showed economic
sentiment improving more than expected across all sectors in
January and a gauge for the phase of the business cycle also
rising this month.

Spot gold hovered near its one-week high of $1,683.39
an ounce reached on Wednesday. A weak yen pushed the most active
gold contract on the Tokyo Commodity Exchange to a
record high of 4,944 yen a gram on Thursday.

U.S. crude futures steadied around $97.96 a barrel
and Brent crude was up to a more than three-month high
above $115.

Asian credit markets were weighed by the selling in
equities, widening the spread on the iTraxx Asia ex-Japan
investment-grade index by 5 basis points.